Thursday, 15 November 2012

The beginning of the "knowledge economy"

Over the last 30 years or so we have often been told we are in a new economy, a "knowledge economy". The knowledge economy is, we are told, something new and exciting, very different from any other economy we have known before. But is this true, are we in any more of a "knowledge economy/society" now than we were during Neolithic times, the Agricultural Revolution, the Renaissance or the Industrial Revolution? When and why did the knowledge economy actually start?

Matt Ridley explains the knowledge economy's rather surprising origins in his book "The Rational Optimist":

"There is now little doubt that hominids spent much of those million and a half years eating a lot of fresh meat. Some time after two million years ago, ape-men had become more carnivorous. With their feeble teeth and with finger nails where they should have had claws, they needed sharp tools to cut the skins of their kills. Because of their sharp tools they could tackle even the pachydermatous rhinos and elephants. Biface axes were like external canine teeth. The rich meat diet also enabled erectus hominids to grow a larger brain, an organ that burns energy at nine times the rate of the rest of the body. Meat enabled them to cut down on the huge gut that their ancestors had found necessary to digest raw vegetation and raw meat, and thus to grow a bigger brain instead. Fire and cooking in turn then released the brain to grow bigger still by making food more digestible with an even smaller gut - once cooked, starch gelatinises and protein denatures, releasing far more calories for less input of energy. As a result, whereas other primates have guts weighing four times their brains, the human brain weighs more than the human intestine. Cooking enabled hominids in ids to trade gut size for brain size". (Ridley 2010: 51).

So our brains developed thanks to cooking and eating meat and it is our brain that allowed us to develop our social and economic institutions in such a way as to get us to our current economy. This tells us that the origins of our economy are ancient and it also suggest that only the economies humans can have are knowledge economies. Our brains are the foundation of our social and economic life and have been from the beginning.

When discussing the question, What happened to the Neanderthals? Tudge (1998: 25) argues

“[t]he Cro-Magnons [ ...] got to know the habits of the animals they hunted and knew where to lie in wait; and different bands shared information, so hunting parties could be forewarned of migrations days in advance.”

He goes on to say

“[m]ost importantly of all [ ...] the Cro-Magnons co-operated: that they traded tools - for which there is abundant evidence - and also traded information. Thus [ ...] the age of trade (and of information) is exceedingly ancient.” (Tudge 1998: 26).

In his discussion of the Gravettian culture which lasted in Upper Palaeolithic Europe from at least 29,000 years ago to around 21,000 years ago Finlayson (2009: 165) writes,

“[n]aturally people had to find ways of moving around without having to carry heavy loads; they also had to find ways of reading the land and of communicating with each other with precision. The Gravettians had entered the information age.”

He also notes the importance of information build-up and its relationship to population growth,

“[o]verall, Ancestors were displaying the adaptability and range of behaviours that has characterized their pre-glacial ancestors and also the Neanderthals. The main difference, and one that was to become increasingly evident as time went by, was that as populations increased in size and information networks became more sophisticated, these people had a corpus of accumulated knowledge that they could draw from. This process of information build-up became less vulnerable to loss as populations grew but at this stage was still not foolproof; the extinction of the knowledge and skills of the painters of western Europe shows us how precarious it remained.” (Finlayson 2009: 196).

When discussing the economic and geographic expansion of the Upper Paleolithic population Ofek (2001: 173) writes

“Upper Paleolithic people apparently used local resources more efficiently than their predecessors - or their Neanderthal neighbors - if the latter still existed as a separate entity at the time (Klein, 1989). Such a sudden increase in the “wealth” of populations suggests a corresponding improvement in the allocation of resources in society, most likely, in my opinion, through the mechanisms of division of labor, exchange, and investment in the most consequential resource of all: Human Capital [ ...].” (Emphasis in the original).

So the argument that the knowledge economy is new, in a historical time sense, is not entirely convincing.